A1 Grand Prix: From riches to rags
The A1 Grand Prix was an exciting motorsports event that attempted to rival the F1 Grand Prix series. It felt as if the dominance of F1 GP was being challenged by a new kid on the block. It was different to say the least. A1 racing employed a different concept of racing, but encountered severe financial difficulties in its infancy stage. At the moment, A1GP is facing severe financial troubles which may result in bankruptcy. Conditions are such that its assets might soon be sold in auction. The story of this unique but fledgling racing event is an interesting one indeed that ended in tragedy.
The A1 Grand Prix racing event was started as a rival event on the lines of Formula One racing. The racing event was the brainchild of Sheikh Hasher Maktoum Al Maktoum, one of Dubai's ruling elite who wanted to break the monopoly of Formula One GP. Unlike F1, the A1GP saw racing teams from nations competing against each other – a concept which was different and unique. All the cars, engines and tires were essentially the same so the racing came down to the skill of the driver. It was called the World Cup of motorsports because of the fact that it brought together countries to race against each other.
It started with a huge financial investment from Sheikh Hasher in 2004 and then had a great first season too. Teams representing countries from the entire globe took part in the initial season with huge broadcasting rights being sold to many different television companies around the world. Everything seemed to be going well until something strange happened. After its initial season, Sheikh Hasher decided to sell his share to RAB Capital and the deal was finalised at the end of 2006. A new chairman was appointed in the form of Tony Teixeira, but he managed to send the company and this event into liquidation in 2009. So let's take a look at what happened to this great event that had so much potential?
It seems it was not as popular as people had anticipated. The owners rushed in and poured huge amounts of money into it and then it did not do as well as they had hoped. Even after securing large television deals, the viewing numbers were not there and the event started to haemorrhage money. The company started to look for potential buyers just after the second season. Financial problems hit the company in 2010 and the company that held the intellectual property rights went into administration and the company that owned the spare parts and supplies failed to pay its suppliers and went into liquidation. Team representing different countries started facing financial difficulties as well and the entire operation fell in on itself. One reason for the major collapse could be the horrendous global financial crunch of 2009. Another reason could be that the racing event was just not as popular as F1 GP and people thought it was a copy of the real thing. Another reason could be that governments did not pump money into their national racing teams because of the recession and the teams folded as a result. Whatever the reasons may be, the racing event with so much potential has gone down the drain.
It is interesting to note how Sheikh Hasher exited the scene so quickly. Maybe he had some foresight that no one else knew of and he handed a sick and dying company to RAB Capital who thought they could save it but could not in the end. The event had $500 million pumped into it since it started and it lost an amazingly huge amount of money during the 2005/2006 season. It lost $240 million, which is mind boggling for any company to lose with such a creative and new venture. The dying company slowly limbers on and is trying to find a new buyer. It might still get lucky and do well but the chances are slim.
In all these problems, the event suffered another setback when there were allegations of fraud in the handling of the liquidation of the company and a fraud investigation was initiated. It seems that under all the pressure to find a new buyer for A1GP and declare the company bankrupt while trying to salvage something from it, some paperwork was not done and forms were not filled and people forgot to do very important parts of the process. Investigations are continuing but it the big picture does not augur well for A1GP.
Even though it started with so much hype, A1GP never quite made it into global audiences. Even with so much support, it failed to make any money and eventually folded. It might come back to life sometime in the future but the chances of such a happening are slim. A great idea came to fruition only to slowly die a very painful and horrible death.
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